What Happened to the Secular Bear Market in Equities?
|
|
- Abel Douglas
- 7 years ago
- Views:
Transcription
1 What Happened to the Secular Bear Market in Equities? January 2015 By - Martin J. Pring History shows that US equity prices have consistently alternated between secular bull and bear trends. These price movements typically average years in length and embrace several different business cycles. In April 2003 we published an article posing the question, Whither the Secular Trend of Equities? which laid out the case for the year 2000 being a secular or very long-term peak for the US stock market. Since the three previous secular bears averaged just over 18-years, our working hypothesis was for a weak market until sometime around Our view of continued secular vulnerability remains unchanged despite recent market strength. Many point to record high equity prices in 2014 as evidence the secular bear ended in 2009 and the dominant trend is now a bullish one. That argument can be countered by the fact that record highs are nothing new in a secular bear market environment. For example, in 1909, seven years after the 1902 secular peak, prices were 16% higher (see point A in Chart 1). We see a similar situation between the 1960 s and 70 s, where the 1972 peak was 27% higher than that achieved 6-years prior (see point B in Chart 1). The current differential between the November 2014 (so far) peak and that of August 2000 has been 36%. How, then, can we justify the label secular bear when nominal prices look otherwise? Chart 1 - Nominal versus Inflation Adjusted US Stock Prices The answer lies in the fact that over very long periods, equity prices (adjusted for inflation) offer a far more realistic way of looking at things. After all, if my stock doubles in price over, say a 10-year a period, and this is replicated by the overall price level, am I any further ahead, in our book, Investing in the Second Lost Page 1 of 10
2 What Happened to the Secular Bear Market in Equities? A Publication of Decade (McGraw-Hill, 2012) we pointed out that over short periods of time, inflation is not a big deal, but over longer intervals it becomes critical as inflation cunningly eats away at the real purchasing value of your portfolio. A comparison of the secular trading ranges in the nominally priced upper panel of Chart 1 with the bear trends of the inflation adjusted series in the lower panel demonstrates that difference pretty clearly. The chart also tells us that in late 2014 the adjusted price series had reached a critical juncture point, just fractionally below the 2000 high. The dashed brown lines and solid arrows show that previous secular peaks became important pivotal points in subsequent periods. Bottom line; now is as good a time as any for anticipating a primary trend peak. Chart 2 offers the same comparison, but this time between the nominal and inflation adjusted MSCI World Stock ETF. In this instance, the adjustment was made using the G7 CPI and the performance is even less robust than that of the US. Therefore, it is difficult not to conclude that the secular bear is both a US and global phenomenon. Chart 2 - ishares MSCI World Stock ETF (ACWI) The Causes of Secular Equity Bear Markets 1. Structural Problems "We're seeing true currency wars and everybody is doing it, and I have no idea where this is going to end. The global elastic has been stretched even further than it was in 2008 on the eve of the Great Recession. The excesses have reached almost every corner of the globe, and combined public/private debt is 20% of GDP higher today. We are holding a tiger by the tail. William White (Chairman of the OECD's Review Committee Daily Telegraph 1/21/2015 Secular bear markets do not develop in isolation but are the product of structural problems in the economy and financial system. In turn, these fundamental and monetary trends are reinforced by long-term swings in investor sentiment. Structural problems are most commonly caused by excessive capacity in key industries, Page 2 of 10
3 What Happened to the Secular Bear Market in Equities? A Publication of either through overbuilding (housing 2006), new competition (steel between 1975 and 1990) or obsolescence because of technological advances (newspapers today, not a key industry, but a good example). In addition an aging population in developed countries offers another headwind as it means fewer spenders and producers. A final characteristic is a top-heavy debt structure, which adds the additional burden of higher servicing costs. In the current cycle dating from 2000, earlier excesses associated with the dot.com bubble and housing have largely been worked off. However, demographic problems continue to act as a headwind, as does the 300% plus total debt/ GDP ratio. Even so, this pales in comparison to Japan s 650% and the world champion in this regard Ireland s 1,100% ratio! One way we can graphically symbolize one aspect of these long-term economic trends is to calculate the ratio between nonfarm payrolls (predominantly full-time employees) and those who work part-time for economic reasons. Chart 3 - Secular Equity Trends and the Labor Market This relationship is not only a great leading indicator for business cycle work, but its long-term trajectories also reflect secular trends in equities. When the ratio is rising, it indicates that full-time jobs are being created at a faster pace than part-time positions. This is a favorable factor because full-time jobs generally pay more and provide superior benefits. Also, an expansion in full-time as opposed to part-time workers demonstrates a stronger commitment by employers because full-time personnel are more difficult and expensive to fire. Returning to Chart 3, the shaded areas indicate secular bear trends in US equities. Such periods also correspond with a series of declining peaks and troughs in the labor market relationship in the Page 3 of 10
4 What Happened to the Secular Bear Market in Equities? A Publication of lower window. This series typically peaks ahead of recessions, which have been flagged by the red highlights. At the start of 2015, there were no signs of business cycle weakness, but the indicator is still in a secular decline. 2. Giant Swings in Psychology Most observers believe it is earnings that drive stock prices, but Charts 4 and 5 show that it is investor s attitude to those earnings, rather than the earnings themselves, that is important. Consequently, an understanding of the secular trend is an appreciation of the fact that investors are continually undergoing long-term psychological mood changes, similar to the swing of a pendulum in a clock. Chart 4 Inflation Adjusted Stocks versus Real Earnings (Smoothed) Chart 4 tracks a 10-year moving average of inflation adjusted profits compared to an inflation adjusted stock market series. Note how profits actually rise during the three secular bear markets. Compare that relationship to the one in Chart 5, which reflects the attitude of investors to those earnings in the form of the Cyclically Adjusted Price Earnings (CAPE) ratio as published by Robert Shiller. A reading in excess of 22.5 indicates a high level consistent with a secular bull market peak. During the course of the subsequent secular bear this measure of valuation retreats to the 7 or 8 times level. At that point, the psychological foundation for a new secular bull is in place. It is important to note that when the P/E is excessive, investors are placing a very high valuation on those earnings. That means they are expecting them to continue to grow and are oblivious to the sustainability of that trend. In short, the only reason that Page 4 of 10
5 What Happened to the Secular Bear Market in Equities? A Publication of investors are willing to buy at those levels is because they are extrapolating recent price trends into the future. In short, they are optimistic, excessively optimistic. Chart 5 Inflation Adjusted Stocks versus the Shiller P/E By the same token, total disgust of equities sets in at secular lows because market participants have experienced 18 or so years of lower inflation-adjusted equity prices. Each rally brings hope, which is only dashed as prices sink to new lows. Under such an environment, it is only natural that investors demand to be paid handsomely for the huge risk they believe they are taking. Hence, the year swing from exuberance and euphoria at the peak of the previous secular bull to despondency and despair at the start of the next one. The alternation of the red and green arrows in Chart 5 show this pendulum swing in crowd psychology has repeated with the consistency of clockwork over the last 114 years. Since secular bears are associated with structural problems, it is not surprising that they are characterized by numerous and frequent recessions. Is it any wonder that investors end such periods in a state of deep depression? Compare this environment to that of the 18-year secular bull market between , which only experienced one period of contraction in Returning to the current situation, the chart clearly shows that recent readings at the 27 level are closer to those at historical secular peaks than any previous secular low. These giant swings in sentiment are not limited to P/E ratios, but can also be observed in similar swings in dividend yields from 2-3% at peaks to 6-7% at secular lows. For the record, the yield on the S&P in December 2014 was around 1.98%. Page 5 of 10
6 What Happened to the Secular Bear Market in Equities? A Publication of Chart 6 shows the Tobin Q ratio, which monitors swings in replacement value of US equities. This measure also moves in generational movements from around $1.05 at tops, to a discount whereby stocks sell at 30c on their replacement value at secular lows. According to the excellent Doug Short web site, the Tobin Q ratio was recently at $1.14, which is higher than any other secular peak except for the final years of the tech bubble. If past is prolog, we would expect to see these measures of valuation/sentiment return to levels closer to extreme pessimism before a solid foundation could be laid for a new secular bull. With the three valuation indicators at extreme levels, it makes sense to closely examine the state of the primary bull market. For if that is in the process of maturing, it is possible the secular bear might be about to resume. Chart 6 The Tobin Q Ratio (source: Dougshort.com/Advisorperspectives.com) The Cyclical Picture Two years of stocks going straight up have chased just about every skeptic from the U.S. market. Among professional forecasters on Wall Street, none tracked by Bloomberg sees a retreat in 2015 Bloomberg 1/5/15 Page 6 of 10
7 What Happened to the Secular Bear Market in Equities? A Publication of The current bull market is 5.8 years old, two years longer than the average of 3.8 years. There is nothing in the rule book that says it cannot continue, but in terms of time, the clock may well be approaching midnight; a view which is supported from the contrarian implications of the Bloomberg quote above. For example, our Stock Barometer, which consists of six technical and inter asset indicators, has recently been deteriorating and now stands at 50%. A reading below 50% is required for a bearish signal. That will not likely happen unless the S&P experiences an end of the month closing below its 12-month MA; that average was at 1945 in December. It is projected to advance close to the 1965 area in January. Until the Barometer actually goes negative, the benefit of the doubt should be given to the bull market. A summary of the Barometer s performance from both 1955 and the start of the secular bear (2000) is presented in Table 1. This model is updated monthly in the InterMarket Review at pring.com. Chart 7 - S&P Composite versus the Pring Turner Stock Barometer Table 1 - Stock Barometer Results Page 7 of 10
8 What Happened to the Secular Bear Market in Equities? A Publication of Even though the Barometer is currently bullish, the technical picture does not come without some risk. For example, the ratio between the Shiller P/E and government bond yields, shown in Chart 8, is one way of measuring equity returns against those of fixed income securities. The vertical lines indicate when this relationship first moves above the.75 (overvalued for stocks) level. As you can see, it pretty consistently signals a risky time to own equities. Nevertheless, as with all indicators, it does give false negatives from time-to-time as was the case in 1998, 2011 and However, the most recent reading at just above.95 is a record, even surpassing 1929 high. We are certainly not forecasting that a type bear will follow the current reading as this is a cyclical, as opposed to secular, indicator. However, given this extended reading, it is likely that equities would be extremely vulnerable in the event of a Stock Barometer sell signal. Chart 8 - Inflation Adjusted US Stocks versus a Stock/Bond Valuation Indicator Another way of comparing the stock/bond current return relationship is to calculate a smoothed momentum indicator for the ratio between Moody s AAA Corporate bond yield and the dividend yield for stocks (Chart 9). Peaks in this momentum series have again consistently signaled primary trend tops in the equity market, as shown by the red arrows above the S&P. Nevertheless, there have been several failed signals, most notably those that developed in the 1990 s secular bull market, and are enclosed within the ellipse. The current situation is warning of problems, as the indicator has once again crossed below its MA. Page 8 of 10
9 What Happened to the Secular Bear Market in Equities? A Publication of Chart 9 - The S&P Composite versus Bond/Equity Yield Momentum Finally, Chart 10 compares the ratio of NYSE margin debt to GDP to the inflation adjusted S&P. This series is currently close to a record. However, it is not the level that offers the best signals of trouble, but a change in trend, since downside reversals indicate when traders are growing more cautious. Chart 10 - S&P versus Margin Debt to GDP Page 9 of 10
10 What Happened to the Secular Bear Market in Equities? A Publication of One way to identify such periods is to observe when the ratio crosses below its 15-month MA. This is indicated on the chart by a sub-zero crossover by the oscillator in the bottom panel. Previous instances have been flagged by the vertical lines. Those signals flagged with a small red arrow indicate when such signals have developed after a sharp decline, such as 1987 or At the moment, the model is still bullish since the ratio remains marginally above its MA. Clearly it would not take much in the form of a contracting number to trigger a signal. Note also that the ratio itself peaked in February and has not kept up with the S&P as is usually the case in a healthy situation. Conclusion The secular bear case has reached a critical juncture in that inflation-adjusted equity prices have moved back to their 2000 peak. Previous highs and lows often serve as important resistance points, which means that the secular bear case is about to be tested. Valuation/sentiment measures are currently at bullish extremes more typically associated with a secular high than low. Since they failed to move to the levels of extreme pessimism associated with previous secular lows, these indicators represent a missing piece of evidence in the secular bull case. Moreover, several indicators that have consistently identified primary trend turning points in the past are flagging danger and that means that our next Stock Barometer sell signal is likely to be a prescient one. We are paying close attention but until then, enjoy the ride but definitely buckle up tighter than usual! - Martin J. Pring *Pursuant to the provisions of Rule 206(4)-1 of the Investment Advisers Act of 1940, we advise all readers that they should not assume that all recommendations made in the future will equal that referred to in this material. Investing in securities involves risks, including the possibility of loss. Performance numbers include all retirement accounts. Performance includes total return (capital growth and dividends, after all costs) Investment decisions formulated by, Inc. are based on proprietary research and methods developed since 1977 by the owner/managers of the firm. None of the material contained herein is intended as a solicitation to purchase or sell a specific investment. Readers should not assume that all recommendations will be profitable or that future performance will equal that referred to in this material. Page 10 of 10
Understanding the Technical Market Indicators
Understanding the Technical Market Indicators Revised: October 2009 Article Written By: Md Saeed Ul Hoque Golden Gate University San Francisco, CA Sharif Gias Assistant Professor of Finance University
More informationINVESTING & TRADING WITH THE JSE PRICE/EARNINGS (P/E) RATIO
INVESTING & TRADING WITH THE JSE PRICE/EARNINGS (P/E) RATIO "At the end of the day, all stock price movements can be traced back to earnings." Page 1 INTRODUCTION This e-book shows how to use the daily
More informationThe Decennial Pattern, the Presidential Cycle, Four- year Lows, and How They Affect the Stock Market Outlook for 2010
The Decennial Pattern, the Presidential Cycle, Four- year Lows, and How They Affect the Stock Market Outlook for 2010 Since this is the start of the first year of a new decade it seemed like a good idea
More informationThree Investment Risks
Three Investment Risks Just ask yourself, which of the following risks is the most important risk to you. Then, which order would you place them in terms of importance. A. A significant and prolonged fall
More informationFRBSF ECONOMIC LETTER
FRBSF ECONOMIC LETTER 213-23 August 19, 213 The Price of Stock and Bond Risk in Recoveries BY SIMON KWAN Investor aversion to risk varies over the course of the economic cycle. In the current recovery,
More informationCommodities & Forex Classical Chart Patterns Report
TWO WAYS TO SHARE: Commodities & Forex Classical Chart Patterns Report Week of August 24, 2014 1. Patterns in Play (CANADIAN $, EURO, AUSTRALIAN $, EUR-JPY, COFFEE, SOYBEANS, BRAZIL EQUITY INDEX, JAPANESE
More informationStochastic Oscillator.
Stochastic Oscillator. By Jay Lakhani www.4x4u.net George Lane was the originator of the stochastic indicator in the 1960 s; the indicator tracks the market momentum. Lane observed that as prices rise
More informationNorthCoast Investment Advisory Team 203.532.7000 info@northcoastam.com
NorthCoast Investment Advisory Team 203.532.7000 info@northcoastam.com NORTHCOAST ASSET MANAGEMENT An established leader in the field of tactical investment management, specializing in quantitative research
More informationApril 27, 2016. Dear Client:
Dear Client: 565 Fifth Avenue Suite 2101 New York, NY 10017 212 557 2445 Fax 212 557 4898 3001 Tamiami Trail North Suite 206 Naples, FL 34103 239 261 3555 Fax 239 261 5512 www.dghm.com Our January letter
More informationGundlach The Scariest Indicator in the World
Gundlach The Scariest Indicator in the World November 19, 2015 by Robert Huebscher Those Federal Reserve governors who intend to vote for an increase in rates at their December meeting need to take a close
More informationChapter 9. The Valuation of Common Stock. 1.The Expected Return (Copied from Unit02, slide 36)
Readings Chapters 9 and 10 Chapter 9. The Valuation of Common Stock 1. The investor s expected return 2. Valuation as the Present Value (PV) of dividends and the growth of dividends 3. The investor s required
More informationDSIP List (Diversified Stock Income Plan)
Kent A. Newcomb, CFA, Equity Sector Analyst Joseph E. Buffa, Equity Sector Analyst DSIP List (Diversified Stock Income Plan) Commentary from ASG's Equity Sector Analysts January 2014 Concept Review The
More informationTHE STATE OF THE ECONOMY
THE STATE OF THE ECONOMY CARLY HARRISON Portland State University Following data revisions, the economy continues to grow steadily, but slowly, in line with expectations. Gross domestic product has increased,
More informationIs It Time to Give Up on Active Management?
Is It Time to Give Up on Active Management? CFA Society of Pittsburgh 3 rd Annual Endowments and Foundations Conference May 2015 Gregory Woodard Portfolio Strategist Manning & Napier Advisors, LLC (Manning
More informationEquity Bubble? No. Richard Bernstein. January 13, 2014. Equity Bubble? No.
Equity Bubble? No. Richard Bernstein January 1, 01 Equity Bubble? No. The US stock market performed very well during 01. The S&P 500 s total return of nearly % far outpaced the returns of most asset classes.
More informationTrade for Big Profits: The Top Stock Methodology
1 In an effort to help you make money in every market condition, I share with you how I view the market and how I use the various indicators to put together a winning trading action plan in Top Stocks.
More informationHISTORICAL TREND IN NSE ASI 70,000.00 60,000.00 50,000.00 40,000.00 30,000.00 20,000.00 10,000.00 (10,000.00) Log ASI ASI. Log ASI
Meristem Securities Limited 124 Norman Williams, Ikoyi South/West. Lagos, Nigeria. Tel: 234-01-271 7350-05 Fax: 2690118 www.meristemng.com, E-mail: nfo@meristemng.com THE NIGERIAN STOCK MARKET CRASH: COMING
More informationTiming the Trade How to Buy Right before a Huge Price Advance
Timing the Trade How to Buy Right before a Huge Price Advance By now you should have read my first two ebooks and learned about the life cycle of a market, stock, or ETF, and discovered the best indicators
More informationInvesting in the Bottoming Process Mike Swanson. We're prepared to do more - The Bernanke. Stock Market Barometer
Stock Market Barometer The Most Influential Financial Newsletter Read By Over 500 Hedge Fund Managers and Thousands of Elite Investors ~ August 5, 2012 Investing in the Bottoming Process Mike Swanson Quote
More informationInvesting Practice Questions
Investing Practice Questions 1) When interest is calculated only on the principal amount of the investment, it is known as: a) straight interest b) simple interest c) compound interest d) calculated interest
More information1 P a g e Questions or comments? Contact us at TSLabs@TradeStation.com
The Fundamental Score Indicator is an analysis technique created to analyze stocks strictly based on certain financial ratios of the company. The score ranges between 0 and 100, with a higher score signifying
More informationChapter Six STOCK SECTORS AND BUSINESS CYCLES
Chapter Six STOCK SECTORS AND BUSINESS CYCLES 1. Introduction The previous chapter introduced the concept of relative strength. Its main purpose is to identify sectors rising faster than the broad market.
More informationTrade Signals S&P 500 Index 1368 By Steve Blumenthal November 14, 2012
Trade Signals S&P 500 Index 1368 By Steve Blumenthal November 14, 2012 Included in this week s Trade Signals are the following: Updated Sentiment Charts sentiment points to RISK ON S&P 500 Index Chart
More informationThe Intraday Bias Indicator
Wednesday, June 13, 2012 Issue 41 Wednesday, August 8, 2012 Intraday Time Analysis Erik Skyba, CMT Senior Quantitative Analyst TSLabs@TradeStation.com Features Studies/Files Included: Focus: Technical
More informationNovember Rally. The days before and after Thanksgiving Day, combined, have had only 9 losses in 51 years on the Dow.
All information and commentary herein has been prepared solely for informational purposes, and is not an offer to buy or sell, or a solicitation of an offer to buy and sell any security or instrument or
More informationHigh Yield Bonds in a Rising Rate Environment August 2014
This paper examines the impact rising rates are likely to have on high yield bond performance. We conclude that while a rising rate environment would detract from high yield returns, historically returns
More information2013 global equity outlook: Searching for alpha in a stock picker s market
March 2013 2013 global equity outlook: Searching for alpha in a stock picker s market Saira Malik, Head of Global Equity Research, TIAA-CREF Executive summary The outlook for equity markets is favorable
More informationDisclaimer: The authors of the articles in this guide are simply offering their interpretation of the concepts. Information, charts or examples
Disclaimer: The authors of the articles in this guide are simply offering their interpretation of the concepts. Information, charts or examples contained in this lesson are for illustration and educational
More information2012 First Quarter Equity Market Review
Investment Insights 2012 First Quarter Equity Market Review By William Riegel, Head of Equity Investments After a volatile year in 2011, equity markets grew more confident in the first quarter of 2012.
More informationMy Favorite Futures Setups. By John F. Carter www.tradethemarkets.com
My Favorite Futures Setups By John F. Carter www.tradethemarkets.com Recognizing Momentum Incredibly easy to do in hindsight. Get in Before the Move? I m a big believer in not chasing markets. By the time
More informationCHART TRADING GUIDE 1
CHART TRADING GUIDE 1 How to understand chart trading This guide is designed to teach you the basics of chart trading- the chart patterns that are covered in this booklet can be used for short and medium
More informationDow Theory. The Key To Understanding Stock Market Movement
Dow Theory The Key To Understanding Stock Market Movement Christopher M. Quigley B.Sc.(Maj. Accounting), M.I.I. Grad., M.A. The Dow theory has been around for almost 100 years. Developed by Charles Dow
More informationRecession Risk Recedes as Jobs Grow
SUMMER 2016 Recession Risk Recedes as Jobs Grow ANTHONY CHAN, PHD CHIEF ECONOMIST FOR CHASE Anthony is a member of the J.P. Morgan Global Investment Committee. He travels extensively to meet with Chase
More informationS&P 500 Composite (Adjusted for Inflation)
12/31/1820 03/31/1824 06/30/1827 09/30/1830 12/31/1833 03/31/1837 06/30/1840 09/30/1843 12/31/1846 03/31/1850 06/30/1853 09/30/1856 12/31/1859 03/31/1863 06/30/1866 09/30/1869 12/31/1872 03/31/1876 06/30/1879
More informationHow cheap is the FTSE 100?
How cheap is the FTSE 100? Nine snapshots of UK equity valuation US equities are very dear right now according to most credible long-term valuation metrics. This points to disappointing returns over the
More information2015 Mid-Year Market Review
2015 Mid-Year Market Review Cedar Hill Associates, LLC www.cedhill.com 6111 North River Road, Suite 1100, Rosemont, Illinois 60018 Phone: 312/445-2900 An Affiliate of MB Financial Bank 2015 Major Investment
More informationFixed-income securities have had an extraordinary run, but don t call it a bubble
Wells Fargo Advantage Funds January 2011 Fixed-income securities have had an extraordinary run, but don t call it a bubble Jim Kochan, Chief Fixed-Income Strategist Jim Fuson, CFA Christopher Kennedy Wells
More informationThe E-Book of Technical Market Indicators 2.0
The E-Book of Technical Market Indicators 2.0 Complex Technical Analysis Made Simple How to build a rational decision making framework (systematic trading model) based on different kinds of technical market
More informationP A R A G O N CAPITAL MANAGEMENT
Bond Market Overview July 2013 Bonds declined in value last quarter as interest rates rose by the most in over two years. The increase was a function of economic surprises, Federal Reserve policy confusion,
More informationRE-DEFINING RISK FOR INTERNATIONAL EQUITY INVESTING
RE-DEFINING RISK FOR INTERNATIONAL EQUITY INVESTING Co-authors: Theodore Lucas, Shirish Malekar, and Andrew Alden, CFA For investors seeking to diversify their portfolios and access the growth opportunities
More informationHow To Hedge or Protect Index Credit Spread Options and Iron Condor Options Against a Steep Correction or Stock Market Crash
How To Hedge or Protect Index Credit Spread Options and Iron Condor Options Against a Steep Correction or Stock Market Crash This article discusses a strategy to hedge index credit spread options against
More informationTIMING YOUR INVESTMENT STRATEGIES USING BUSINESS CYCLES AND STOCK SECTORS. Developed by Peter Dag & Associates, Inc.
TIMING YOUR INVESTMENT STRATEGIES USING BUSINESS CYCLES AND STOCK SECTORS Developed by Peter Dag & Associates, Inc. 5 4 6 7 3 8 3 1 2 Fig. 1 Introduction The business cycle goes through 4 major growth
More informationAlphaSolutions Reduced Volatility Bull-Bear
AlphaSolutions Reduced Volatility Bull-Bear An investment model based on trending strategies coupled with market analytics for downside risk control Portfolio Goals Primary: Seeks long term growth of capital
More informationToto, I ve a feeling we re not in Kansas anymore... Dorothy, Wizard of Oz, 1939
April 21, 2016 Page 1 of 6 Toto, I ve a feeling we re not in Kansas anymore.... Dorothy, Wizard of Oz, 1939 Ever since the financial crisis of 2008 09, economic trends in the U.S. and in many foreign countries
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Suvey of Macroeconomics, MBA 641 Fall 2006, Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Modern macroeconomics emerged from
More informationHow to Profit from cyclical Cycles
AMP Capital Investors Limited ABN 59 1 777 591, AFSL 397 Profiting from market cycles Looking outside the conventional wisdom box Nader Naeimi Senior Investment Strategist, AMP Capital Investors JUNE 11
More informationMarket Briefing: Stock Market Valuation Metrics & Models
Market Briefing: Stock Market Valuation Metrics & Models July, 1 Dr. Edward Yardeni 1-97-73 eyardeni@ Joe Abbott 73-97-3 jabbott@ Mali Quintana --1333 aquintana@ Please visit our sites at www. blog. thinking
More informationM7.1 Challenging the Market Price: Cisco Systems, Inc.
M7.1 Challenging the Market Price: Cisco Systems, Inc. Price = $24 per share Forward P/E = $24/$1.42 = 16.9 Book value per share = $6.68 P/B = $24/6.68 = 3.59 B/P = 0.278 Introduction Part A of this case
More informationSP500 September 2011 Outlook
SP500 September 2011 Outlook This document is designed to provide the trader and investor of the Standard and Poor s 500 with an overview of the seasonal tendency as well as the current cyclic pattern
More informationSecrets for profiting in bull and bear markets Sam Weinstein
Secrets for profiting in bull and bear markets Sam Weinstein 1. Check market indicators for overall direction 2. Scan the industry groups to know which one to zero in 3. Cull out the stocks with the most
More informationEQUITY RETURNS IN THE COMING DECADE
March 2011, Number 11-5 RETIREMENT R E S E A R C H EQUITY RETURNS IN THE COMING DECADE By Richard W. Kopcke and Zhenya Karamcheva* Introduction The majority of retirement savings is invested in corporate
More informationIs Gold Worth Its Weight in a Portfolio?
ADVISOR BYLINE By Bryan Harris Dimensional Fund Advisors June 2012 Is Gold Worth Its Weight in a Portfolio? During a weak global economy and uncertain financial markets, many investors tout the benefits
More information22Most Common. Mistakes You Must Avoid When Investing in Stocks! FREE e-book
22Most Common Mistakes You Must Avoid When Investing in s Keep the cost of your learning curve down Respect fundamental principles of successful investors. You Must Avoid When Investing in s Mistake No.
More informationDefinitions to Basic Technical Analysis Terms. www.recognia.com
Definitions to Basic Technical Analysis Terms www.recognia.com A Alert An alert is a notification sent when a significant event occurs in one or more investments of importance to a trader. Recognia sends
More informationINSTITUTIONAL ADVISORS. April 27, 2005 GOLD CONTRA - CYCLICAL OPPORTUNITY?
INSTITUTIONAL ADVISORS April 27, 2005 GOLD CONTRA - CYCLICAL OPPORTUNITY? According to thorough technical analysis, the gold sector seems to have reached a significant low. This is complete with measurable
More informationPurer return and reduced volatility: Hedging currency risk in international-equity portfolios
Purer return and reduced volatility: Hedging currency risk in international-equity portfolios Currency-hedged exchange-traded funds (ETFs) may offer investors a compelling way to more precisely access
More informationS&P 500 outlook: Close to peak for 2015
S&P 500 outlook: Close to peak for 2015 August 12, 2015 Markets and Products Analysis INVESTMENT PORTOFOLIO ANALYSIS DIVISION Important Disclaimer in page 2 1 Disclaimer Disclaimer: The information herein
More informationChapter 2.3. Technical Analysis: Technical Indicators
Chapter 2.3 Technical Analysis: Technical Indicators 0 TECHNICAL ANALYSIS: TECHNICAL INDICATORS Charts always have a story to tell. However, from time to time those charts may be speaking a language you
More informationMACROECONOMIC AND INDUSTRY ANALYSIS VALUATION PROCESS
MACROECONOMIC AND INDUSTRY ANALYSIS VALUATION PROCESS BUSINESS ANALYSIS INTRODUCTION To determine a proper price for a firm s stock, security analyst must forecast the dividend & earnings that can be expected
More informationExam 1 Sample Questions
Exam 1 Sample Questions 1. Asset allocation refers to. A. the allocation of the investment portfolio across broad asset classes B. the analysis of the value of securities C. the choice of specific assets
More informationMarket timing at home and abroad
Market timing at home and abroad by Kenneth L. Fisher Chairman, CEO & Founder Fisher Investments, Inc. 13100 Skyline Boulevard Woodside, CA 94062-4547 650.851.3334 and Meir Statman Glenn Klimek Professor
More information11.3% -1.5% Year-to-Date 1-Year 3-Year 5-Year Since WT Index Inception
WisdomTree ETFs WISDOMTREE HIGH DIVIDEND FUND DHS Nearly 10 years ago, WisdomTree launched its first dividend-focused strategies based on our extensive research regarding the importance of focusing on
More informationPeter Elston: Investment Letter
Issue 3: July 2015 Peter Elston: Investment Letter For the love of charts... This document is intended for professional investors only I like charts. This month I take a look at MSCI s major global sectors
More informationUnderstanding the market
Understanding the market Technical Analysis Approach: part I Xiaoguang Wang President, Purdue Quantitative Finance Club PhD Candidate, Department of Statistics Purdue University wang913@purdue.edu Outline
More informationPTA is a step by step guidance with many trainer and assistant trainers coaching using real case studies
128B Telok Ayer Street Singapore 068597 Tel: 6492 3196 Fax: 6227 4812 www.terraseeds.com paperandpencil@terraseeds.com TerraSeeds Practical Technical Analysis (PTA) Stock Market Trading Course Our full
More informationMarket Timing Approaches: Non- financial & Technical Indicators. Aswath Damodaran
Market Timing Approaches: Non- financial & Technical Indicators Aswath Damodaran I. Non- financial Indicators Spurious indicators that may seem to be correlated with the market but have no raconal basis.
More informationEcon 202 Section 4 Final Exam
Douglas, Fall 2009 December 15, 2009 A: Special Code 00004 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Section 4 Final Exam 1. Oceania buys $40
More informationEnd to Corporate Restructuring is a Prerequisite for Ending Zero-Interest Rates
JCER Researcher Report No. 50 End to Corporate Restructuring is a Prerequisite for Ending Zero-Interest Rates Sumio Saruyama Senior Economist, The Japan Center for Economic Research Dec, 2004 Steep Increase
More informationSmall Cap Stocks. November 16, 2013
November 16, 2013 Optimal Bear Timing is NOW Small Caps highly overvalued Biotech to an extreme Deflation an integral part of Supercycle Bear Markets Bonds undervalued and oversold Last week we trimmed
More informationEconomic and Financial Market Update
Economic and Financial Market Update www.wellscap.com James W. Paulsen, Ph.D. Chief Investment Strategist WELLS CAPITAL MANAGEMENT is a registered service mark of Wells Capital Management, Inc. New-Normal
More informationRE-DISCOVERING DIVIDENDS
RESEARCH SERIES issue 1 April 2012 RE-DISCOVERING DIVIDENDS Why dividend investing is making a comeback in these challenging market conditions Prepared by the Investment Products Research Team pg 2 Empire
More informationD D4 DT. = $2.79. We will estimate. E P / E where P/
1 Valuation Formulas for Stocks (Preliminary Version) Floyd Vest, April 2014 Investing in stocks is about earning a reasonable return, hopefully in terms of of appreciation of stock price and/or accumulation
More informationMATHEMATICAL TRADING INDICATORS
MATHEMATICAL TRADING INDICATORS The mathematical trading methods provide an objective view of price activity. It helps you to build up a view on price direction and timing, reduce fear and avoid overtrading.
More informationUsing Order Book Data
Q3 2007 Using Order Book Data Improve Automated Model Performance by Thom Hartle TradeFlow Charts and Studies - Patent Pending TM Reprinted from the July 2007 issue of Automated Trader Magazine www.automatedtrader.net
More informationOver the past several years, Americans have
Industry Securities Industry Bears, bulls, and brokers: employment trends in the securities industry in the securities industry strongly correlates with stock market value; however, market volume does
More informationAdvanced Trading Systems Collection FOREX TREND BREAK OUT SYSTEM
FOREX TREND BREAK OUT SYSTEM 1 If you are a part time trader, this is one system that is for you. Imagine being able to take 20 minutes each day to trade. A little time at night to plan your trades and
More informationBuy Stocks; Sell Bonds
June 16, 2012 Buy Stocks; Sell Bonds Since the turn of the millennium, investors have experienced a -1% return in equities. Despite this miserable return, P/E 10, the ratio of prices to a 10-year moving
More information6. Get Top Trading Signals with the RSI
INTERMEDIATE 6. Get Top Trading Signals with the RSI The Relative Strength Index, or RSI, is one of the most popular momentum indicators in technical analysis. The RSI is an oscillator that moves between
More informationSandRidge Permian Trust Risk Outweighs Potential Reward of Higher Oil Prices
SandRidge Permian Trust Risk Outweighs Potential Reward of Higher Oil Prices SandRidge Permian Trust units (PER) fell from $4.50 on the ex-distribution date in November 2015 to an all-time low of $2.01
More informationEQUITY MARKET RISK PREMIUMS IN THE U.S. AND CANADA
CANADA U.S. BY LAURENCE BOOTH EQUITY MARKET RISK PREMIUMS IN THE U.S. AND CANADA The bond market has recently been almost as risky as the equity markets. In the Spring 1995 issue of Canadian Investment
More informationMid Cap Growth S - T 6/18/13 (10) 6/20/13 (30) 6/4/13 (20) 4/23/13 (60) 5/31/13 (30) 5/24/13 (0)
Tactical Asset Allocation Style & Sector Signals Ratings 60 and Above are a Green Light Ratings 40 and Below are a Red Light Ratings 41 to 59 are (Neutral) Light Green indicates going from Green to Neutral
More informationGMMA 2.0 User Guide. August 2010 Edition PF-30-01-02
GMMA 2.0 User Guide GMMA 2.0 User Guide August 2010 Edition PF-30-01-02 Support Worldwide Technical Support and Product Information www.nirvanasystems.com Nirvana Systems Corporate Headquarters 7000 N.
More informationA Model of Housing Prices and Residential Investment
A Model of Prices and Residential Investment Chapter 9 Appendix In this appendix, we develop a more complete model of the housing market that explains how housing prices are determined and how they interact
More informationFinancial Planning Newsletter
Financial Planning Newsletter Structuring Your Portfolio for Future Success? Beware of Misleading, Misinterpreted & Out Dated Information Wealth Management Steinberg High Yield Fund Steinberg Equity Fund
More informationAre Bonds Going to Outperform Stocks Over the Long Run? Not Likely.
July 2009 Page 1 Are Bonds Going to Outperform Stocks Over the Long Run? Not Likely. Given the poor performance of stocks over the past year and the past decade, there has been ample discussion about the
More informationThe Price Action of Stocks Trumps Fundamentals
Fourth Quarter Letter Market Comments The Price Action of Stocks Trumps Fundamentals January 9, 2014 by Robert Mark of Castle Investment Management Perhaps the best argument that one can make for stocks
More informationTECHNICAL OUTLOOK 301110 TRADING LIMIT TEAM DATA USED IN TECH ANALYSIS. SHORT TERM = 2-6 WEEKS, MID-TERM=2-6 MONTHS, L-TERM=6-9 MONTHS DAX 30
TECHNICAL OUTLOOK 301110 TRADING LIMIT TEAM DATA USED IN TECH ANALYSIS. SHORT TERM = 2-6 WEEKS, MID-TERM=2-6 MONTHS, L-TERM=6-9 MONTHS DAX 30 Data for 30/11/10Monte Carlo (TradingLimit) - - - Non Stop
More informationUsing Formations To Identify Profit Opportunities
Using Formations To Identify Profit Opportunities Using Formations To Identify Profit Opportunities The concepts and strategies discussed may not be suitable for all investors. It is important that investors
More informationElliott-Wave Fibonacci Spread Trading
Elliott-Wave Fibonacci Spread Trading Presented by Ryan Sanden The inevitable disclaimer: Nothing presented constitutes a recommendation to buy or sell any security. While the methods described are believed
More informationSEARCHING FOR VALUE: EQUITY MARKET VALUATIONS HOME AND AWAY
SEARCHING FOR VALUE: EQUITY MARKET VALUATIONS HOME AND AWAY Barney Whiter Senior Managing Director Corporate Finance/ Restructuring Valuation and Financial Advisory Services FTI Consulting U.S. equity
More informationApril 2016. The Value Reversion
April 2016 The Value Reversion In the past two years, value stocks, along with cyclicals and higher-volatility equities, have underperformed broader markets while higher-momentum stocks have outperformed.
More informationTrend Determination - a Quick, Accurate, & Effective Methodology
Trend Determination - a Quick, Accurate, & Effective Methodology By; John Hayden Over the years, friends who are traders have often asked me how I can quickly determine a trend when looking at a chart.
More informationHow to find the big winners in the stock market.
How to find the big winners in the stock market. Big Winners = Stocks in the positive right-hand tail of the distribution of returns Distribution of returns Normal vs. Fat Tails Theoretical distribution
More informationTHE CYCLE TRADING PATTERN MANUAL
TIMING IS EVERYTHING And the use of time cycles can greatly improve the accuracy and success of your trading and/or system. THE CYCLE TRADING PATTERN MANUAL By Walter Bressert There is no magic oscillator
More informationCompany Fundamentals. THE CMC Markets Trading Smart Series
Company Fundamentals THE CMC Markets Trading Smart Series How to evaluate company growth potential At any given point in time, share prices tend to represent the sum of expectations about its value from
More informationThe Great Bull Market in Bonds Is Over What Comes Next? Introduction
The Great Bull Market in Bonds Is Over What Comes Next? Introduction November 2010 BY: JOHN L. SICA President, Meridian Capital Partners, Inc. In 2008, for the first time in 50 years, the 3.4% yield on
More informationChapter Seven STOCK SELECTION
Chapter Seven STOCK SELECTION 1. Introduction The purpose of Part Two is to examine the patterns of each of the main Dow Jones sectors and establish relationships between the relative strength line of
More informationPerspective. Economic and Market. A Productivity Problem?
James W. Paulsen, Ph.D. Perspective Bringing you national and global economic trends for more than 30 years Economic and Market March 20, 2015 A Productivity Problem? In the post-war era, U.S. productivity
More informationFinancial Planning in a Low Interest Rate Environment: The Good, the Bad and the Potentially Ugly
Financial Planning in a Low Interest Rate Environment: The Good, the Bad and the Potentially Ugly In June of 2012, the 10 year Treasury note hit its lowest rate level in history when it fell to 1.62%.
More information